A Total Cost Analysis Model of Construction Logistics Solutions Comparing Direct Delivery and Delivery via a Construction Logistics Center at JM
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Examensarbete för masterexamen
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The construction industry has challenges in increasing productivity and at the same time
keeping production costs down in comparison to other industries. The construction
industry also entails a high environmental footprint due to choices of materials and the
many materials deliveries necessary for building completion. Rearrangements of
construction logistics and implementing supply chain management (SCM) provide
possible solutions to these issues. As part of gaining control of the supply chain and
reducing the number of deliveries to the site, Construction Logistics Centers (CLCs)
are increasingly being used. The aim of this study is to develop a total cost analysis
(TCA) model to evaluate two logistics processes of materials delivery to construction
site: Direct Delivery or Delivery via a CLC. A reference project at the Swedish
construction company JM provides data to the TCA model.
The TCA model examines costs in relation to logistics activities from the point of
materials leaving the supplier to being placed at the assembly area at the site. The cost
data in the TCA are gathered from JM’s framework agreements with suppliers and the
CLC-operator. The activities identified in each logistics process are gathered from
observations as well as the framework agreements and information from involved
parties. The study contributes with a TCA model for different logistics solutions and
batch sizes where the TCA itself provides insights of how logistics operations are
organized and the costs they entail.
The study shows that JM through the implementation of a CLC and the subsidiary JM
Supply (responsible for on-site logistics) has taken successive steps towards more
efficient SCM. The study contributes to the understanding of the effects of
implementing a CLC. The results from the TCA model shows that due to the present
supplier agreements and logic of batch sizes, the most cost advantageous logistics
solution at JM is the direct delivery to site. However, it should be noted that costs differ
significantly in relation to various material types. The TCA model also illustrates that
the number of transportations to site decreases with the implementation of a CLC,
which is considered a benefit. Thus, to reach the full potential of a CLC solution, JM
needs to align purchasing, production, and logistics processes further by taking a
holistic perspective of value creation. The research results support JM’s future decision
making about the design of their construction logistics solutions as to increase
productivity and improve market competitiveness.
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Ämne/nyckelord
Construction Logistics, Construction Logistics Centers, Total Cost Analysis, Construction Supply Chain Management, Lean Construction, Logistics Cost Management